Billionaire investor Bill Ackman still likes Netflix (NFLX) stock despite a challenging year that has sent the stock reeling.
“We like it,” the well-known value investor and Pershing Square Capital Management CEO said at Yahoo Finance Invest. “That’s a super cheap stock. And this was a company trading on mid-thirties or 30-plus times earnings, and today it’s at 16, 17 times earnings. The business remains quite strong.”
Ackman purchased Netflix shares in the second quarter. As of Thursday, the stock was down 33% this year.
Ackman sees several catalysts ahead for Netflix shares.
“I think passage of time, continued earnings growth, cash flow, revenues, and some additional content wins. Maybe better disclosure from the company, so people can have a better sense of how their subscriber base translates,” Ackman explained.
But the pullback has mostly been deserved.
62.69 -1.85 (-2.87%)
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62.95 +0.26 (+0.41%)
Netflix has lost viewership to rival Alphabet’s (GOOGL) YouTube, delivered a less-than-hot content slate this year, and prompted the view on Wall Street that content spending will have to increase dramatically in 2027 to regain eyeballs.
The third quarter for Netflix reflected all of this and then some. Netflix delivered a mixed third quarter earnings report, with earnings of $0.87 per share, beating Wall Street estimates of $0.82. Revenue of $12.87 billion came in line with analysts’ expectations.
For the fourth quarter, Netflix forecast revenue of $13.44 billion, below expectations of $13.57 billion. The company also cut its full-year advertising revenue outlook to about $2.7 billion from $3 billion previously.
“The US is also working,” Netflix co-CEO Ted Sarandos told analysts on an earnings call. “It’s just not growing as fast as it could or as fast as we’d like. We had some really solid doubles and triples this year. But the other territories count on some of those titles being home runs so that they’ll travel around the world.”
To reboot the bull case for the stock, Sarandos laid off 6% of the workforce. He sent well-regarded chief content officer Bela Bajaria packing in favor of former Disney (DIS) exec Peter Rice.
“2026 has been more of a transitional year than we envisioned. While the latest Ads miss is frustrating, we find comfort in Membership retention that is still healthy and corrective actions within content that can drive a potential re-acceleration in 2027E and into 2028E (which we are not modeling today),” KeyBanc analyst Justin Patterson said.
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